IBM joins business social networking race

October 2008

IBM earlier this week launched a beta version of its business social networking platform Bluehouse. While the platform has a solid pedigree, it has entered a race with a large field of competitors, many of which are well ahead.

Bluehouse, announced at Lotusphere in January, is IBM's entry into on-demand social computing services for the small to medium-sized business market. Think of a combination of Facebook profiles, LinkedIn contacts, WebEx web conferencing, Microsoft Office Live document sharing, SurveyMonkey online surveys, Rememberthemilk online activity lists, and Twitter online chat, plus a few other things like online charts thrown in for good measure.

The service is aimed at providing a collaboration platform for, and between, SMBs and business units within larger organisations. The cloud computing delivery model offers a 'do not worry the CIO' way of getting started, and the service will be charged for on a subscription basis, pricing for which has yet to be announced.

IBM is positioning Bluehouse explicitly at the business market and believes that user charging will differentiate Bluehouse from platforms funded via advertising or data exploitation.

In addition, many hundreds of other competitors provide individual elements of Bluehouse's functions. Some of these niches are dominated by global market leaders, for example, Facebook and LinkedIn in the business networking niche. In other niches such as online document sharing, the market is highly fragmented, ranging from the giants such as Google Docs to companies like 4Shared, Calameo, Docstoc, Issuu, Scribd, and Yudu.

IBM's branding and infrastructure capabilities will help it to gain customer trust, but it will be a marketing challenge to create a network effect among SMBs from a standing start.

The business online collaboration market is at an early stage of maturity. Even though some competitors may appear to have a strong lead on IBM, the race has really only just begun. The market leaders will claim an advantage created by switching costs. It takes time and effort to set yourself up in a social computing platform and to build a network. Users may well stick with their existing networks.

The market of users is quite fragmented. More tellingly, many businesses have still yet to fully embrace the notion of social computing as a way of doing business, let alone form strong allegiances to a platform. Some organisations still discourage the use of Facebook at work, concerned that social networking equals 'social notworking'.

Social computing requires a major culture change for organisations, so a marathon race is expected where many of the early leaders will run out of puff.

Bluehouse may benefit from its purely business networking positioning in this regard. IBM's branding and corporate image will be an advantage in convincing some customers to trust social computing in general and Bluehouse in particular. IBM's depth of infrastructure capabilities will also give many customers a sense of confidence in the reliability and continuity of the cloud behind the service and the integrity of its data security.

IBM also has a depth of internal experience in how to orchestrate purposeful social computing environments, and this experience will inform Bluehouse's design as it evolves as an integrated collaboration suite.

However, the bottom line in social computing is the ability to draw a crowd and to mobilise a network effect. IBM has traditionally focused on the big end of town, the corporate IT market served by its Lotus collaboration suite.

It will need to come up with some creative and high-impact new marketing solutions to persuade the millions of smaller companies across the world to give Bluehouse a go and to create a network buzz from a standing start. This will be a test of IBM's commitment to the SMB market.

Source: Computergram

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